NACD: Safety plans could open Pandora's Box

New White House plans to boost safety and security at chemical facilities could conceivably consolidate multiple overlapping federal and state rules or they might create a regulatory monster.

On August 1, President Barack Obama issued a wide-ranging executive order (EO) designed to “improve the safety and security of chemical facilities and reduce the risks of hazardous chemicals to workers and communities”.

The order, crafted in the wake of the April 17 explosion that killed 15 people and injured 200 others at the West Fertilizer plant in Texas, directs five cabinet-level departments, 11 additional federal agencies and scores, perhaps hundreds of state and local entities to come up with “joint collaborative programs [that] can be developed or enhanced, including by better integrating existing authorities, jurisdictional responsibilities and regulatory programs in order to achieve a more comprehensive engagement on chemical risk management.”

The explosion at the West Fertilizer plant in Texas spurred the government into tightening safety and security measures

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Obama set a range of deadlines for the executive order, some of which fall on November 1 while others run through April of next year. The recent furlough of the Federal Government will certainly delay these deadlines.

“If there is an opportunity for those areas of regulatory duplication to get ironed out,” says Brown, “that potential could be a good thing. But we’ll have to see how that plays out.”

While hopeful, Brown is not very optimistic. “I have to admit concerns that some of these areas of duplicative regulation will not be easily unwound,” he says, “especially given the relatively aggressive and even very aggressive time frames that the president has set.”

“Given the state of affairs in Washington now, expecting a good outcome from this executive order in so short a period of time is going to be difficult,” Brown says.

Far from serving to consolidate multiple existing and overlapping federal agency regulations, Brown adds, “I think it is entirely possible that this executive order will result in still more regulations.”

Brown, president/CEO of Brown Chemical Co., Inc. in New Jersey, worries that as a result of the EO, “more chemicals and substances will be brought into the arena where one or another or multiple agencies will be looking at them”.

“Given that there are some aggressive timelines and requirements in the executive order, this could lead to still more regulatory over-reach,” he notes.

Among the areas of regulatory over-reach would be a multi-agency demand for inherently safer technology (IST) mandates.

“IST is a concern for the chemicals industry at large,” Brown says, “especially given some of the motivation behind the executive order, the West Fertilizer explosion. That event has to some degree given a sense of greater urgency to ‘do something’, anything, but to do something right away. As we all know, just ‘doing something’ does not always mean a good result.”

Brown notes that the West Fertilizer tragedy has allowed some to take “opportunistic advantage of the situation, pressing for IST being one of them”.

Among other concerns flowing from Obama’s executive order, is the worry that the ostensible integration of multiple federal regulatory agencies’ oversight for chemical facilities will produce many more, not fewer on-site inspections.

“One of the things that concerns us is the multi-mode inspections concept,” Brown says.

Brown says he has heard that the various federal agencies with jurisdiction over chemical facility safety and security will be charged with representing the regulatory interests of other agencies. “When the EPA inspector shows up, will he then start looking at areas outside of EPA jurisdiction such as transportation, site security, drug enforcement?”

Brown worries inspectors from one agency would likely lack the necessary credentials for regulatory oversight by other agencies and be targeting operations or conditions without cause. Alternatively, the executive order could simply result in more agencies involved in inspecting and auditing distribution sites.

“Either way, I think there will be a lot more scrutiny and up-close visits from regulators, and certainly the potential for more burdensome regulations over time,” he says.

NACD believes that the executive order will place a greater focus on the activities of its members

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UNDER SCRUTINYBrown also has concerns that White House and agency reaction to the West Fertilizer tragedy will create greater focus on NACD member firms and other operators that generally are in compliance with various rules, when the objective should be the small minority of chemical sector players who operate on the fringe.

“I see a big possibility that regulators will make 90% of chemical facilities miserable in an effort to find the 10% that are not compliant,” he says.

Jennifer Gibson, NACD’s vice president for regulatory affairs, shares many of Brown’s concerns.

“There are several aspects of the executive order that impact NACD members,” she says.

In particular, Gibson notes, is the EO mandate for the Environmental Protection Agency (EPA) to review its Risk Management Program (RMP), for the Department of Homeland Security (DHS) to reconsider its Chemical Facility Anti-Terrorism Standards (CFATS) and for the Occupational Safety and Health Administration (OSHA) to examine its Process Safety Management Standards (PSM) to, in the EO’s words, “determine if additional chemicals could be covered by existing federal regulatory programs”.

Those reviews of existing regulations by the agencies are to be completed by November 1 and “of course could expand the scope of those agencies’ rules and pull in additional chemicals, facilities and companies”, she points out.

Those three regulatory programs on their own are “pretty challenging as they are”, Gibson says, and represent only part of the executive order’s broad mandate. “This could create a greater regulatory burden for our members on top of everything else.”

Gibson also drew attention to the executive order’s requirement for more information-sharing among federal agencies and with state and local departments and first responders. She worries that greater distribution of facilities’ “worst case scenarios” that are mandated by federal rules – which detail the worst possible off-site consequences of a major accident – could cause leaks that would “provide a roadmap for terrorists”.

“How do you balance a community’s right to know against the potential for handing critical information to terrorists?” Gibson asks.

She too is concerned that the executive order review could open the door to inherently safer technology mandates. She says the EO could be a vehicle for a long-sought goal of environmental groups to convince EPA to use the “general duty clause” of the Clean Air Act (CAA) to impose IST criteria on chemical facilities.

Brown says that NACD is reaching out to its member companies to make them aware of the executive order and its possible consequences, the timelines involved and who might be affected.

“We’ve held a webinar and sent out a couple of news briefs to members about the EO,” Brown says, “and we’re going to be talking about it at the Annual Meeting.”

“We’re trying to make sure that our people are aware of what’s going on with this, and we’re staying in touch with the regulatory agencies to let them know that we’re ready and willing to help as this all develops,” Brown says.